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Topps Takes Gamble, Purchased by Fanatics for $500M

Updated: Jul 21, 2022

Cards. You gotta know when to hold ‘em, know when to fold ‘em.

Not many days long after the clock struck midnight in 2022, Fanatics struck a deal of their own with Topps, a company synonymous with baseball cards and baseball history, as reported by Forbes, ESPN, Sportico and more. They bought the company for a price tag of $500 million, along with Topps’ expiring license to exclusively produce trading cards with Major League Baseball logos and trademarks.

Topps has an extensive 70-year legacy as the manufacturer of baseball cards dating back to 1949 when they released a set of “Magic Photo Cards” in their bubblegum packs, in which images appeared on cards when exposed to water and light. These cards showed now-historic greats, such as… “The Sultan of Swat, The King of Crash, The Colossus of Clout, Babe Ruth, the Great Bambino!” Fun fact: Sandlot director, David Mickey Evans, was born in 1962. In case you need a reminder of how long traditional baseball cards have been around, remember that they pre-date the creator of one of the most iconic baseball movies of all time.

Fast forward through rosters upon rosters of players, the historic sales of highly valued cards and the proliferation of the digital age, there now exists a thorough history with Major League Baseball and Fanatics to unpack, much like that of a newly released Topps Annual Set.

1951-1952: Topps Produces and Releases the First Full Set of Baseball Cards

Until 1952, Topps had only released single baseball cards at a time, never a full collection. The first annual set released in 1952 featured 407 cards in total that were released in batches. Through the present day, this annual set has become a staple for collectors with each passing season. These anticipated sets continued to grow in popularity and caused people to fall in love with collecting baseball cards and of course, the game of baseball.

“Generations of baseball fans have grown more connected to the game through collecting baseball cards. We look forward to partnering with Topps to restore baseball cards as the game’s premiere collectable.” -Bud Selig

January 2010: Topps Granted Exclusive MLB License

Topps was granted the exclusive rights to produce baseball cards featuring Major League Baseball logos and trademarks. Reports of this exclusive license started circulating in the summer of 2009 with the exclusivity starting on January 1, 2010. This made Topps the first exclusive multi-year license holder of MLB intellectual property to be reproduced on baseball cards, stickers and other collectibles. The duration of the license was never disclosed.

Why give exclusivity to one brand? Then-Commissioner Bud Selig wanted to give Topps market exclusivity, effectively shutting out other competitors in the market, such as Panini and Upper Deck: “Generations of baseball fans have grown more connected to the game through collecting baseball cards. We look forward to partnering with Topps to restore baseball cards as the game’s premiere collectable.” It was speculated that having kids peruse shelves with baseball cards from multiple brands would confuse them as early consumers of the sport.

Exclusivity over league intellectual property wasn’t unheard of in this time, as Panini and Upper Deck worked on deals with the National Basketball League and the National Hockey League, respectively. Important thing to note is that Panini and Upper Deck still held licenses with the MLB Players’ Association, which means they could use player imagery but not MLB trademarks, now held exclusively by Topps…or well, let’s keep going with this storyline.

March 2013: MLB Extended Topps’ Exclusive License

The exclusive license that Topps acquired in 2010 was extended through 2020 in an effort for consistency and long-term business goals. Their venture as an exclusive licensor was comparatively short, but substantially lucrative. Mark Sapir was quoted on Cardboard Connection Radio during a 2013 Sports Industry Summit, “Having a long-term deal and a long-term partnership allows you to invest in the business and plan the business."

The impact that baseball cards had on the league’s revenue and its players’ income would be revealed soon enough.

April 2013: MLBPA Pays Players Their Licensing Income Previously Withheld During Labor Negotiations

The union disclosed the disbursement of licensing-related income withheld from players over the course of their most recent labor negotiating cycle in 2011. Their next annual report to the U.S. Department of Labor showed large increases in revenue for licensees, such as Take-Two Interactive video game developer for MLB 2K, Majestic licensed apparel company, MLB Advanced Media and last but not least, Topps. Topps brought in $9.6 million over the 2012 fiscal year to be distributed amongst players in the form of “special dues refunds” that are usually held out in between labor deals.

July 2018: Topps’ Exclusive Rights are Extended (Again)

Profits and check distributions continued for all parties involved, and MLB once again extended Topps’ exclusive license. This time, through 2025; or so they thought.

2020: Topps Reaches a Record Year In Sales

Topps saw a record year of sales, totaling $567 million. This 23% increase in sales resulted from a change in e-commerce and overall digital strategy amidst preparations to enter the world of non-fungible tokens (NFTs).

April 2021: Topps Announces Plans to Merge with Mudrick Capital Acquisition Corporation II

Valued at about $1.3 billion by Mudrick Capital, Topps was expected to merge with Mudrick late in the second quarter or early in the third quarter. Topps president, Michael Brandstaeder, is quoted “The strategies we have implemented in recent years, including building a digital business that has deepened consumer engagement, have driven excitement and innovation across Topps, fueling strong and increasing revenue with accelerating profitability. The future for Topps has never been brighter, and, with a talented and dedicated management and employee base, we are excited for the road ahead.”

Jason Mudrick, founder and Chief Investment Officer of Mudrick Capital is quoted alongside him, “[Topps] is well situated with a universally recognised brand to capitalize on the fast emerging market for collectible NFTs. We are excited to partner with this exceptional organization to help write the next chapter in the long history of its truly iconic brand.”

The mutually-beneficial merger was predicted to more than double Topps’ valuation from $1.3 billion to $2.7 billion. A huge reliance of that valuation was that Topps’ would maintain its licensing deals with Major League Baseball and the MLB Players’ Association.

August 2020: Fanatics Buys Exclusive Trading Card License from MLB

Fanatics worked a behind the scenes deal with Major League Baseball to become the exclusive licensee for baseball trading cards after Topp’s license was set to expire at the end of 2025. That means that starting January 1, 2026, Fanatics would own the exclusive rights once held by Topps for more than a decade at that point, and a right that they held onto for decades prior. Topps’ similar license with the MLBPA runs through the end of this year.

Topps claims that they were not aware that this deal was happening until the headlines were about to surface on our smart devices. In an official statement by Andy Redman, executive chairman of Topps, and as reported by the New York Times, “[we were] unaware that Major League Baseball was negotiating with anybody other than Topps regarding our rights beyond 2025.”

Topps and Mudrick Capital promptly called off their merger. Without holding the MLB license past 2025, Topps would not be able to produce the very baseball cards that made their business blossom over the decades. Knowing that their MLB license had an ending date, Topps’ future was in question.

September 2021: New Fanatics Trading Cards Company Valued at Over $10 Billion

After acquiring the future title to MLB intellectual property, Fanatics raised $350 million for their new trading card business in a Series A funding round. This round of investments brought their new company, Fanatics Trading Cards, at a valuation of $10.4 billion before even producing a single card.

January 4, 2022: Fanatics Buys Topps At a Price Tag of $500 Million

On January 4th of this year, the inevitable happened. Fanatics announced that it would be purchasing Topps for $500 million. With this purchase, they have acquired Topps’ entire sports and entertainment department and with it, the remaining years of their exclusive MLB license and the final year of their MLBPA license. Fanatics now can start producing and distributing trading cards using MLB logos and trademarks now instead of waiting until 2025.

Not only did they acquire Topps’ intellectual property, but Fanatics now owns the human capital that Topps once had, specifically employees of various tenures at Topps. Per ESPN, all of the approximately 350 Topps employees will shift over to Fanatics Trading Cards.

Michael Rubin is full of optimism in Fanatics’ future, as if it were ever in question before acquiring Topps. His statement announcing the purchase is quoted in CNBC: “With trading cards and collectibles being a significant pillar of our long-term plans to become the leading digital sports platform, we are excited to add a leading trading cards company to build out our business.”

The sweet crumbs left in this Fanatics’ fairy tale are the leftover candy and gift cards divisions still in Topps’s ownership. Even with crumbs there, it’s questionable if Topps might ever find its way back to home plate.

Moving Forward

This entire saga, having ballooned significantly since Fanatics announced its eventual license to be the exclusive trading card producer of Major League Baseball in August, is an example of how valuable exclusivity and intellectual rights are for a brand to create, distribute and sell licensed products that consumers love.

Just before losing their license with MLB beyond 2025, Topps was valued at $1.3 billion. Topps was purchased by Fanatics for $500 million, over half than less what they were valued back in April by Mudrick Capital. When Fanatics acquired the rights in a backdoor deal with the league, Topps’ brand became obsolete. I don’t mean to burst their bubblegum, but their standing as a baseball card company was well-known and celebrated. You, the reader, most likely look at a Topps baseball card differently than you would a piece of Bazooka bubble gum.

Topps did not know that Major League Baseball was considering passing off the exclusive rights to another party. It was a gamble that Topps didn’t start negotiating to extend their rights as they had done twice in the last near-decade before negotiating a merger with another company. If I learned one thing in 1L property: it’s that nothing lasts in perpetuity.

It’s hard to not feel bad for Topps when you consider the power dynamics of an e-commerce behemoth taking away intellectual property rights that transformed what was once a family-owned candy store in Brooklyn to a top, global licensor for a major sports league. On the other hand, it may have been the most strategic move that Fanatics has made in recent years. Instead of buying out Topps outright, they acquired the license that made them valuable. When Topps lost their value, Fanatics was able to sweep in and buy them out at a discount.

So now, not only does Fanatics have a league license for baseball cards years ahead of schedule. From an outsider perspective, they have the human capital needed to transition themselves and win loyalty from longtime Topps consumers: creative individuals previously working for Topps who’ve made these cards so successful over the years, relationships with manufacturers, printing machines and everything that went into a 2.5” x 3.5” card.

Some still say they’ll never buy a baseball card with a Fanatics logo where a Topps logo should be. Others see potential for Fanatics to bring baseball cards into the future, namely through NFTs.

And it’s an added point on where intellectual property is needed as new digital ventures open a wild, wild west. A big motivator for Fanatics to purchase Topps right away is for them to develop baseball cards in the booming NFT and crypto space through their digital collectible arm, Candy digital. On January 13th, Candy Digital announced the opening of its secondary marketplace for Major League Baseball NFTs. That marketplace opened to consumers on January 15th, as announced by Fanatics and Candy Digital social media.

Who knows what’s next for licensed MLB trading cards, physical and digital alike.

Baseball Cards. Topps didn’t fold them. Rubin now holds them.


Andrea is a FLEX-2L at the Elisabeth Haub School of Law at Pace University and the President of the Pace Sports, Entertainment and Arts Law Society (@Pace_SEALS on IG and Twitter). She is in her third season as an Email Marketing Coordinator at BSE Global for the Brooklyn Nets, Barclays Center and Long Island Nets. Prior to BSE, she spent over a year at Steiner Sports Memorabilia before they were acquired by Fanatics in June 2019. You can find her on most social media channels as @dreagarcia21.

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